Oil price


The price of fuel in the United States is much cheaper than Indonesia

In the midst of various corrections in crude oil prices around the world, there are currently many kinds of demands from various groups for the government to reduce the price of fuel. This is because the value is very expensive. Rudi Rubiandini, who is a former head of the special unit for oil and gas, also assessed that the price of fuel in Malaysia is actually much cheaper than in Indonesia. This is also said by the National Confederation of Trade Unions. Then, is it a fact that the price of fuel oil in Southeast Asia is relatively expensive, so the price really needs to be lowered? Let’s see the following explanation.

During the year, the price of raw fuel around the world is very low. Oil prices in West Texas Intermediate, which is one of the benchmarks from the United States, decreased by 8 percent to US$ 18.27 per barrel. Meanwhile, the price of Brent oil, which is currently the reference for European countries including Indonesia, experienced a similar decline, namely US$ 28.08 per barrel.

Overall the price of crude oil in the world has decreased drastically. This makes the price of fuel oil sold must also decrease. For example, this happened in the United States where the price of fuel oil only reached an average of US $ 2.7 / gallon only. Although in line with various oil prices around the world, the magnitude of the decline in fuel prices in the United States is also quite small when compared to the match in oil prices around the world. This is because if the price of oil on WTI is one of the benchmarks for the United States, it has decreased by up to 70% throughout the year.

Pertamina also strongly confirmed that the decline in fuel oil in America occurred as of February 1, 2020. The price of non-subsidized fuel, namely for Pertamax Turbo, was Rp. 9,850 liters and pertamax Rp. 9000/liter and pertalite to Rp. 7.650 / liter if converted to rupiah. Based on his explanation, should Indonesia cut the price of all fuel oil?

Basically the price is expensive or cheap it is relative. For fuel, BBM has perfect elastic properties with a price difference that can be considered a little less relevant. This is because of its existence as a substitute product. What is used as a parameter of whether or not fuel is expensive in the eyes of these consumers also depends on the availability of this fuel in the market.

The increase in the price of Pertamax fuel will encourage consumers to switch to other products, such as Pertalite which has a much lower price. This switch is very fast because there are various functions of the two which are almost the same in terms of availability. It becomes very elastic more perfect. Therefore, of course it is better for us to always weigh the price of fuel in Indonesia compared to countries in Southeast Asia. It is very useful to see if the substitution price of fuel in Indonesia is much more expensive or cheaper.
When referring to the Global Petrol Price, the price of fuel oil in Indonesia is at the level of US$ 0.58 or around Rp. 9000 per liter when in rupiah. When compared to the other seven ASEAN countries, the Pertamax price is much cheaper than the fuel price in these five ASEAN countries.

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